Sunny Homes

Tapping the large addressable residential solar market in India

India is marching towards accomplishing the ambitious target of achieving 100 GW of solar capacity by 2022. Of this, 40 GW is to come through distributed solar or the rooftop solar segment. However, closer observation shows that about 70 per cent of installed rooftop capacity is concentrated in the commercial and industrial space. The government and institutional segments are the next significant contributors, while the residential space is still lagging behind. With such a large number of residential homes in India and such a low number of solar installations, the need of the hour is to accelerate the pace of adoption of residential solar by Indian households.

India’s geographical location assures 250-300 sunny days, positioning it ideally to generate solar electricity. Compared to utility-scale plants where large tracts of land and dedicated transmission infrastructure are required, residential solar is way simpler and quick to implement. It uses idle space on the roofs of homes instead of expensive land. Besides there is no additional requirement for transmission and distribution infrastructure and virtually zero transmission or distribution losses as the energy is consumed at the point of generation. The distributed nature of generation also ensures better grid stability. Thus, rooftop solar, and residential in particular, can become an essential part of the growth story of the solar industry.

From a consumer behaviour perspective, setting up a solar plant on one’s home is a lucrative proposition as it generates enough power to meet as much as 80 per cent of the household electricity demand. It also provides virtually free electricity to the household once the initial investment is recovered over anywhere between four and six years. Urban homeowners are interested in increasing their savings, and are concerned about reducing their role in environmental degradation and about their social capital. With a burgeoning section of people with enough disposable income to invest in solarising their homes, the residential segment presents the correct mix of potential consumers. These behavioural and financial aspects also make this segment suitable to invest in.

To ensure faster adoption of residential solar, it is essential to overcome the barriers hampering the penetration of renewable energy among individuals at every stage. The low level of consumer awareness and inadequate knowledge of the costs and benefits of rooftop solar are the biggest roadblocks. Many people are not aware of the loans and subsidies available for solar support.

To add to it, there are numerous perceptions around residential rooftop solar, such as the high cost of installation, hassle of maintenance, frequent and time-consuming association with the government, and bureaucratic delays. In reality, the return on investment on a solar plant is very high as it helps in reducing not only the carbon footprint but also electricity bills. Most importantly, the government is incentivising households by providing subsidies. More awareness campaigns by both industry players and the government would help people who can and are willing to buy to make an informed and quick decision about adopting rooftop solar solutions.

The second major challenge is frequent policy changes and lack of policy clarity. Greater internalisation of the policies by policymakers and implementers, and fewer policy changes will help in faster adoption. The fact that the state governments are coming out with tenders for the residential segment is proof that they are remarkably sanguine about the market.

The third challenge is the absence of reliable long-term players providing quality solutions. The efforts of small EPC players are very fragmented, making it difficult for them to gain the trust of consumers. Quality products and improved solutions are vital to increase the momentum of residential installations. Consumers are often wary about the hassles they could face in the installation process. However, quality players that provide hassle-free services are present in the market and offer promise. Another issue that residential solar consumers often perceive is the idea that a solar panel would mar the beauty of their homes or ruin their roofs. While the latter is not true, the solution for the former is a more aesthetic solar solution that can beautify and add value to homes.

The addressable residential solar market in India is huge. In fact, it has great potential to take the country on to the path of self-sufficiency in terms of power. The combined effort of the government and service providers can drive the adoption of solar power in India and help the country emerge as a global leader in the generation of renewable energy.